LoneStar is selling the Skypark business park in Glasgow for £80m – a 7.16% yield.
It has instructed JLL to market the office investment and development opportunity, which comprises 508,144 sq ft of office space, 8,573 sq ft of retail and 21,530 sq ft of warehouse and ancillary accommodation.
There are six office buildings in total as well as three development sites. It is multi-let with 69.54% of the income payable by 12 tenants.
The property is in Finnieston, Glasgow’s digital media quarter, and has an overall WAULT of 5.48 years to expiry and 4.1 years to break.
It produces £6.6m pa in rent, with office rents in the building ranging from £12-30 per sq ft. Prime rents in Glasgow are currently at around £31 per sq ft for grade A space.
The office investment market in Glasgow has proven a popular choice among international investors.
Office grade A rents in Glasgow are currently the lowest of all of Scotland’s Big Six cities at around £30 per sq ft, suggesting a strong potential for rental growth which is attracting investor interest.
Meanwhile, according to Savills, only 18 months worth of supply remains and the next wave of office development in Glasgow is not expected for five years. As a result headline rents on refurbished offices have grown 25% since 2012 compared to a 9% rent growth for new-build rents over the same time period.
Key office transactions this year have included a 115,286 sq ft office on York Street, Glasgow, which sold to Wirefox with Hong Kong equity for £48.5m – a 6.5% net initial yield, and Middle Eastern investor Tanyari acquiring 55-59 Buchanan Street, Glasgow, for £22.1m – a 3.99% yield.
LoneStar acquired Skypark in 2015 as part of its £1bn deal with Moorfield – Project Laser – which was a portfolio of mixed-use UK secondary properties which it bought from Moorfield’s maturing private equity funds.
At the time, the deal was financed with a £593m loan from RBC Capital Markets and Wells Fargo.
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